A blog about economics, finance, business and corporate governance. My background is in economics, with degrees from Columbia and Johns Hopkins. A career in international development, equity capital markets and as a corporate finance chief and board member lead me to think about events in a different way--hence the blog's name.

Wednesday, February 4, 2015

President Putin's Adventurism in Ukraine Won't Solve His Problems

As the Wall Street Journal notes, President Putin's objectives in Ukraine included sending a message to dissident political and ethnic groups in Russia about the consequences of looking West or for independence. As we've written about for some time, strengthening Ukraine's economy with Russian help, or at least with non-interference, would have been the best hand for him to play.

Now, the collapse in energy and materials prices have taken away the biggest levers Mr. Putin planned to use on major oil companies and on Western Europe.

In the background, the long-run demographics in Russia don't favor prolonged dominance by a native Russian majority. Russia's Muslim population is projected to grow from some 18 million in 2010 to approximately 19 million in 2030, according to estimates reported by the Pew Foundation.

Rampant alcoholism among the native Russian population, along with public health problems and higher death rates continues to be an issue, and the WSJ suggests that the Putin government is getting desperate enough dealing with population unrest as to use vodka as a 'pacifier.'

Predictably,oligarchs and successful business owners have long been buying up London and U.S. real estate, and the capital flight continues.

This unstable situation bears watching, but our foreign-policy challenged administration seems to be focused on domestic election-oriented issues at present.